Key trend resistance halts MCX silver rally

Gurumurthy K BL Research Bureau | Updated on December 02, 2014 Published on December 02, 2014

Silver futures traded on the Multi Commodity Exchange (MCX) witnessed a sharp rally on Monday. The contract opened on a weak note taking cues from the global market that plunged after the Swiss voted against increasing its central bank’s gold reserves. However, silver prices reversed sharply higher in the later part of the day.

MCX silver futures plunged to a low of ₹32,626 a kg early on Monday and reversed sharply higher to ₹36,950 – a whopping 13 per cent rise from the low. This rally has halted at a significant trend-line resistance level and the contract has given back some of its gains. It is currently trading near ₹35,850.

Given the fact that the contract has risen sharply in a single trading day, further rally to breach the hurdle at ₹36,950 is unlikely, at least for the rest of this week. Having said this, there is a strong likelihood of a pull back in the coming days. Immediate support is at ₹35,000 which is likely to be tested now. A break below this support can drag the contract to ₹34,000 thereafter.

Traders can go short at current levels. Stop-loss can be placed at ₹36,750 for the target of ₹34,500.

Note: The recommendations are based on technical analysis. There is a risk of loss in trading.

Published on December 02, 2014
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